 Small assumptions (can) have a large bearing: evaluating pension system reforms with OLG modelsMarcin Bielecki, Karolina Goraus-Tańska, Jan Hagemejer, Krzysztof Makarski and Joanna Tyrowicz Economic Modelling, 2015, vol. 48, issue C, 210-221 Abstract: The objective of this paper is to inquire the consequences of some simplifying assumptions typically made in the overlapping generations (OLG) models of pension systems and pension system reforms. This literature is largely driven by policy motivations and the alternative modelling choices are rarely discussed. On the other hand, the complexity of general equilibrium OLG modelling necessitates some simplifications in the model. We run a series of experiments in which the same reform in the same economy is modelled with six different sets of assumptions concerning the functional form of the utility function, time inconsistency, bequests' redistribution, labour supply decisions and internalization of the linkage between social security contributions and benefits in these decisions as well as public spending. We find that these assumptions significantly affect both the size and the sign of the macroeconomic and welfare measures of the policy effects with the order of magnitude comparable to the reform itself. Keywords: Pension system reform; Overlapping generations (OLG); Defined benefit; Defined contribution; Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:48:y:2015:i:c:p:210-221 DOI: 10.1016/j.econmod.2014.10.043 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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